Tag: Companies Act

As a bare minimum, directors are required to act in a manner which benefits the company – that is, to act in the company's best interests. This is entrenched in section 76 of the Companies Act which requires all directors, alternate directors and prescribed officers to act in good faith, in the best interests of the company and with the necessary degree of care, skill and diligence and prevents such persons from (1) abusing their position; and (2) knowingly causing harm to the company.

The recent Supreme Court case of Murray NO and others v African Global Holdings (Pty) Ltd concerned the group of companies known as the Bosasa Group, which has received much scrutiny under the Zondo Commission into State Capture.

Certain senior politicians seem to have a misapprehension of how business rescue works in South Africa, particularly as it regards the situation at South African Airways (SAA). Some within the ruling party recently indicated that government will intervene to 'retain the [sic] SAA as a state-owned enterprise'. This cannot legally be done.

In a recent hearing before the Gauteng High Court, Hlumisa Investment Holdings RF Ltd v Kirkinis 2019 (4) SA 569 (GP), the minority shareholders of a holding company attempted to use provisions of the Companies Act, No. 71 of 2008 ('the Act') to claim damages from the directors of the company for the reduction in value of their shares. 

The construction industry is unique in that developers, manufacturers, suppliers, contractors and sub-contractors are all in the same cash stream, and when a company at the top end of the chain becomes financially distressed it has a knock-on effect on the rest of the industry.

Airports Company South Africa (ACSA) directors should reread the personal liability sections in S45 in the Companies Act 2008 (the Act) before extending any further largesse to SA Express Airways (SAX).

Over the last few years we have seen various changes being made with regards to the International Financial Reporting Standards (IFRS) accounting framework, which includes new standards such as IFRS 15 (Revenue), IFRS 9 (Financial Instruments) and IFRS 16 (Leases), replacing the old IAS 18, IAS 32 and IAS 17 respectively.

Where a former managing director of a municipal entity was sued by that entity for alleged breach of the Municipal Finance Management Act 2003 (MFMA) it was held that she was entitled to join 19 other municipal officials on the ground that they were allegedly joint wrongdoers and equally liable to the municipality if she herself was liable for breach of various responsibilities whilst she was in office.

An often misunderstood issue among entrepreneurs is the muddled duties of individuals who act in the roles of shareholder, director and employee. The court recently assisted to untangle these issues.

The recent IODSA’ panel discussion on directors’ duties in respect to climate change highlighted the increasing realisation that directors need to factor climate change into their governance deliberations about strategy, risk management, products and services.